Seeking Alpha

Rapper 50 Cent pumped a penny stock to his Twitter followers over the weekend, and the shares...

Rapper 50 Cent pumped a penny stock to his Twitter followers over the weekend, and the shares exploded higher. Jesse Eisinger asks: “Is what 50 Cent did really that different from what happens all day long on CNBC when professional money managers take to the airwaves to praise the stocks of companies they already own?”
Comments (33)
  • KSAccountant
    , contributor
    Comments (769) | Send Message
     
    While crappy...I so no difference between what 50 Cent did and what CNBC or Goldman Sacs does! Just look at what GS did with Greek bonds...they sold them to the public and then shorted the crap out of them on the open market. But, back to 50 Cent, penny stocks have always been the arena of the speculators and "pump and dump" crowd (even the mafia), why is what happened really a surprise to anyone?
    12 Jan 2011, 06:22 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Most major entertainers are also business owners. Whether it's clothes or, as in this case, electronics, most stars have significant stakes in various business enterprises.

     

    And like all business stakeholders, they would like nothing more than to pump their holdings to anyone who'll listen (and buy).

     

    And no, what 50 Cent did was no different than CNBC. In fact, he was on CNBC doing the same sort of thing:
    www.cnbc.com/id/40970078
    12 Jan 2011, 06:23 PM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    The answer depends on whether he has a Series 7 license or not.
    12 Jan 2011, 06:25 PM Reply Like
  • Silentz
    , contributor
    Comments (708) | Send Message
     
    Yeah, it seems like he opening himself up to some litigation because he's not licensed to make stock recommendations. The people that get in late on the penny-ponzi could lose out big when the early buyers bail out with their profit.
    12 Jan 2011, 06:26 PM Reply Like
  • User 487974
    , contributor
    Comments (1105) | Send Message
     
    Quick! Get Chuck Schumer, the sheeple are getting fleeced. Pleeeeaseeee
    12 Jan 2011, 06:26 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    It's funny that 50 Cent can move a stock so much. I guess on a low-volume, low-priced stock, his fans can make a pretty big move.

     

    Either that, or a lot of hedge fund managers are closet 50 Cent fans?

     

    Regardless, I am curious how many day traders will start following entertainers on Twitter in the hopes of catching a rapper-induced rally.
    12 Jan 2011, 06:27 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5357) | Send Message
     
    Somebody should warn 50 cent, the SEC makes a very high priority of pursuing celebrities who have p/r power, to display how carefully they're protecting the little guy.

     

    He could ask Martha Stewart, or Mark Cuban, for instance.
    12 Jan 2011, 06:28 PM Reply Like
  • Jasper M
    , contributor
    Comments (1652) | Send Message
     
    A "drive-by" pump-and-dump. Via Twitter. How Charmingly 21st century.
    I hope Mr. Cent realizes that, while most consumers are comfortable with items of a performer's ouvre becoming dated with time, they are not likely to be so forgiving re investment advice.
    12 Jan 2011, 06:31 PM Reply Like
  • spald_fr
    , contributor
    Comments (2728) | Send Message
     
    [At the current market cap of $71 million (per Yahoo Finance) that's a $50 million gain from Friday.]

     

    Guess i shud b a 50c phan.
    12 Jan 2011, 06:35 PM Reply Like
  • TeresaE
    , contributor
    Comments (3041) | Send Message
     
    I'm amused by all those that bring up the Series 7 licensing, and 50's lack of one.

     

    As if that license has ever kept an investor from losing money. Seems to me, they are tons of lousy pump & dump schemes that cost clients money touted by licensed brokers.

     

    No wonder we are so screwed up as a country. 50 cent pushes a penny stock - which amounts to next to nothing - Bernie Madoff swindles for years and years, with red flags up and down and all around and the SEC ignores him. Cramer allows Corporate Shills to lie and then fake cries when his groupies lose their arses.

     

    What complete BS. A Series 7 license apparently makes theft, fraud and capitalizing on others lack of knowledge ok for most people.

     

    I'm sure the SEC will go after 50. After all, Bernie got a pass for a long, long time. But little pissant things like Martha Stewart and a Tweet - now that we stupid Americans are concerned with.

     

    Yet one more distraction while the big boys set us up to rob us blind. Well, rob what is left - they have already managed to steal so very much.

     

    I'm sure the SEC will go after him the full extent of the law, yet how many bankers whom have wiped out the collective wealth of entire strata of our middle class are still running around spending their billions. Heck, the Fed is making sure they make even more.
    12 Jan 2011, 06:52 PM Reply Like
  • Silentz
    , contributor
    Comments (708) | Send Message
     
    Teresa, the license doesn't prevent anyone from losing money, but it does give you the lawful ability to recommend a stock without fear of being personally prosecuted for a loss, provided you aren't involved in fraud in doing so, and also providing you've done your due diligence on the investor. In order to receive the license, you're required to understand how securities work. Does that make someone a stock market guru? No. But those are the rules. Mr. Cent didn't do any due diligence on his subscribers' investment needs nor did he determine their risk tolerance. He didn't provide them with the proper disclaimer forms that warn investors of the possible risk to principal. So he's in the wrong, at least according to securities law.

     

    Whether the SEC chooses to prosecute is irrelevant.

     

    Now, is it right that the SEC is subjective in who they decide to go after? That's a whole different conversation.
    12 Jan 2011, 07:00 PM Reply Like
  • Duude
    , contributor
    Comments (3376) | Send Message
     
    No! The series 7 only applies if he collects a fee or commission based on having provided the 'advice'.
    12 Jan 2011, 07:08 PM Reply Like
  • wyostocks
    , contributor
    Comments (8056) | Send Message
     
    Pump and Dump. Hello SEC.
    12 Jan 2011, 06:53 PM Reply Like
  • Tony Petroski
    , contributor
    Comments (6373) | Send Message
     
    I missed this tweet--can we find out what stock this is? I want to get in on this.
    12 Jan 2011, 06:58 PM Reply Like
  • wyostocks
    , contributor
    Comments (8056) | Send Message
     
    I take back my comment. I agree with you. Lets get in on the action.
    12 Jan 2011, 07:07 PM Reply Like
  • Histake
    , contributor
    Comments (44) | Send Message
     
    HNHI (H&H Imports Inc). Lebed.biz sent out an alert Sunday night about the stock mentioning 50 Cent owned millions in this stock. Lebed is the PUMP KING. No one can PUMP a stock like this guy.
    13 Jan 2011, 12:01 AM Reply Like
  • KTS
    , contributor
    Comments (48) | Send Message
     
    While he certainly pumped the stock, is there any evidence that he dumped it as well?
    12 Jan 2011, 07:04 PM Reply Like
  • Duude
    , contributor
    Comments (3376) | Send Message
     
    People don't need a series 7 to recommend a stock. They only need it if they plan on collecting a fee for having done so. But if the SEC looks into his case and finds he's been pumping stocks and dumping them into the buying the next day they will come down on him like a ton of bricks. But he'd be an idiot to risk it with all he has to lose.
    12 Jan 2011, 07:06 PM Reply Like
  • Silentz
    , contributor
    Comments (708) | Send Message
     
    Yep, you're right. I stand corrected.
    12 Jan 2011, 07:17 PM Reply Like
  • coddy0
    , contributor
    Comments (1182) | Send Message
     
    Duude
    But he'd be an idiot to risk it with all he has to lose.
    ===================
    On the other hand
    HNHI already lost about 25% since pumped.
    He'd be an idiot to pump into this SHT his followers
    12 Jan 2011, 09:21 PM Reply Like
  • Scootger
    , contributor
    Comments (228) | Send Message
     
    Do yourself a favor and listen to 50cent next time he pitches a stock. The botton line is that he moves markets, something that the best investors in the world seek to do with their public announcements and analysis of investments. Follow him on Twitter use quick fingers to capitalize.

     

    The best part is now that he is invested he will find a way to make this company profitable through his massive network.

     

    The guy just figured out easy math. Star power+capital+twitter= BREAKOUT.
    12 Jan 2011, 07:55 PM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Do you know anything about the company he has been tweeting about? Anything?
    12 Jan 2011, 08:03 PM Reply Like
  • Silentz
    , contributor
    Comments (708) | Send Message
     
    What?? He did nothing to make the company profitable. All he did was pump the stock. That does nothing to the products or services the company offers, nor does it magically confer success on them.
    13 Jan 2011, 11:22 AM Reply Like
  • Jacob Wolinsky
    , contributor
    Comments (464) | Send Message
     
    Lol I wonder if he even knows that a P/E ratio is
    12 Jan 2011, 08:08 PM Reply Like
  • KTS
    , contributor
    Comments (48) | Send Message
     
    Whether or not he knows what a P/E ratio is, the man certainly knows how to make money.
    12 Jan 2011, 10:13 PM Reply Like
  • ricarpe
    , contributor
    Comments (7) | Send Message
     
    HNHI.OB

     

    Here's a link to Yahoo! Finance coverage:
    finance.yahoo.com/q?s=...
    12 Jan 2011, 08:17 PM Reply Like
  • Scootger
    , contributor
    Comments (228) | Send Message
     
    The company he is pitching, HNHI, is no longer the company it used to be. You can throw the old research out the window and re-create your models with the caviat that 50 Cent who made millions on Vitamin Water has legged in. He is fully invested in this company now changing the balance sheet/landscape.

     

    P/E to 50 Cent is
    50CentXChelsea LatelyXG-Unit labelXhedge fund pals=revenue.

     

    50 Cent might have just ordered 500k headphones through a dummy company to get the stock to a buck.

     

    God Bless America
    12 Jan 2011, 08:27 PM Reply Like
  • mike mohr
    , contributor
    Comments (451) | Send Message
     
    This is what Henry Bludget was doing in 2000 pumping AMZN.
    12 Jan 2011, 08:43 PM Reply Like
  • slam stocks
    , contributor
    Comments (1312) | Send Message
     
    SEC has to be more aggressive with this type of stock pumping schemes. Is this really any different than GS pumping Facebook? Howard Stern pumping Sirius? As well all rappers from Jay Z, Russell Simmons and Puff Daddy selling their clothing lines through video and song?
    12 Jan 2011, 09:03 PM Reply Like
  • Stephen Frankola
    , contributor
    Comments (173) | Send Message
     
    "I took quarter water and sold it in bottles for 2 bucks
    Coca-Cola came and bought it for billions, what the fu?"
    -50 Cent, in "I Get Money" on getting $200 million from his Vitamin Water stake.
    12 Jan 2011, 10:45 PM Reply Like
  • Jasper M
    , contributor
    Comments (1652) | Send Message
     
    I must rise in dispute of those that feel Mr. Cent is taking dangerous legal risks vs. the SEC. That agency has demonstrated pretty conclusively that it couldn't find its ass with both hands. GS, JPM, silver . . . Who was it that uncovered the Chinese stock fraud machine? NOT the SEC.
    12 Jan 2011, 11:42 PM Reply Like
  • Scootger
    , contributor
    Comments (228) | Send Message
     
    Bottom line is he broke no law. Simply made an investment then told his 3.5MM friends. Warren Buffet is nervous, he understands the power of twatting but can barely see the screen.

     

    Fiddy should have 7MM followers by next month once this news fully filters out. I am already following. Praying he blesses us once again with his wisdom and trading savvy.

     

    50 Cent: "Yo, this stock is gonna double, buy as much as you can afford"

     

    Scootger : Fiddy I am a savvy investor too, I will buy some, I know how to ride waves at my own risk. Gitty up!
    13 Jan 2011, 01:41 AM Reply Like
  • balan
    , contributor
    Comments (52) | Send Message
     
    so he made a penny 1¢ stock multiply by fifty?
    does he sleep on pink sheets or just pump 'n dump on 'em?
    13 Jan 2011, 07:20 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector